Oil rises after Fed takes steps to boost economy

NEW YORK (AP) — The price of oil rose after the U.S. Federal Reserve announced steps to boost a U.S. economy it says is too weak to reduce high unemployment.

The Fed will spend $40 billion a month to buy mortgaged-back securities. The purchases are intended to lower long-term interest rates to spur borrowing and spending. The Fed also extended a plan to keep short-term interest rates at record-low levels through mid-2015.

Benchmark crude fluctuated after the Fed's decision, before rising above $98. It was up 79 cents to $97.80 at 1:15 p.m. EDT.

Expectations of action by the Fed, as well as the European Central Bank and China's government, has kept oil in a narrow range the past few weeks, balancing gloomy economic news. All three have now delivered.

Traders on Thursday also kept a close eye on unrest in the Middle East.

Protesters stormed the U.S. Embassy compound in Yemen's capital Thursday, and there is violence around the U.S. mission in Cairo. The U.S. ambassador to Libya was killed Tuesday.

Brent crude, used to price international varieties of oil, rose 37 cents to $115.70 per barrel.

Meanwhile, the average price for a gallon of gas in the U.S. rose to $3.87, the highest since April 21. Refiners have run short on supplies of summer blends of gas, particularly in the Northeast. They're allowed to start selling cheaper winter blends this weekend.

Natural gas in storage increased by 27 billion cubic feet to 3.429 trillion cubic feet for the week that ended Sept. 7. The supply is 11.1 percent more than the year-ago level of 3.087 trillion cubic feet and 9 percent more than the five-year average of 3.145 trillion cubic feet.

Natural gas is down 7 cents to $2.99 per 1,000 cubic feet.

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